MPF Fund & Obligations

The Mandatory Provident Fund (MPF) System, a cornerstone of Hong Kong’s multi-pronged retirement protection framework, has been in operation since 1 December 2000. This system regulates mandatory, privately-managed, and fully-funded contribution schemes. Employees, employers, and self-employed persons covered by the MPF System must make regular mandatory contributions, calculated at 5% of the relevant income, subject to statutory minimum and maximum income levels of $7,100 and $30,000 per month, respectively.

Employing companies can choose any private MPF fund for contributions to the Hong Kong pension fund, with annual amounts detailed in Annex IR56B.

In general, all employees are required to pay taxes on income earned from working in Hong Kong. However, employees living and working outside of Hong Kong may obtain an exemption from the Inland Revenue Department (IRD) of the HKSAR, provided they prove filing and payment of taxes in their country of residence. Additionally, overseas residents who do not live and work in Hong Kong are exempt from MPF registration.

Currently, 12 MPF trustees offer 24 schemes to about 4.7 million members and 360,000 participating employers. The aggregate net asset value of all MPF schemes exceeds $1,100 billion, with an annualized internal rate of return (net of fees) of 2.5% since the MPF System’s inception. Non-compliance with MPF requirements by employers is an offense subject to heavy penalties.

Employees can elect to transfer their accrued benefits from mandatory contributions to an MPF scheme of their choice at least once a year.

Financial institutions in Hong Kong must comply with the Common Reporting Standard (CRS) for the international regime of Automatic Exchange of Information (AEOI). They must report details of account holders who are foreign tax residents to the local tax authority, the IRD, which then shares this information with the relevant foreign tax authorities.

A significant reform, the eMPF Platform, is set to revolutionize the MPF System. This digital platform will streamline, standardize, and automate MPF scheme administration, enhancing efficiency and reducing fees. The eMPF Platform promises a quicker, simpler, and predominantly paperless MPF experience, reshaping the system’s landscape.

The development of the eMPF Platform is nearing completion, with the onboarding of MPF trustees and their schemes beginning in June 2024 and full implementation expected in 2025.

Mayon Solutions Limited is available to provide advice on various aspects of the MPF system.

Reach out to us: sales@mayon.hk